Fresh tech sell-off fears as investor chip frenzy cools
Chipmaking stocks plunged in Seoul and New York on Monday as investors opted to cash out of SK Hynix following a blistering share price rally following its Nasdaq debut last week.
The Kospi, Seoul’s blue-chip index, tumbled 8.9 per cent to 6,806.9 points, dragging it further from the 9,000 mark it was touching just under a month ago. Korea’s market has fallen more than a fifth from its June high of 9,385.5.
SK Hynix suffered a 15.3 per cent fall in Seoul to trade at 1,845,000 KRW (£918.5) per share, while rival chipmaker Samsung Electronics slumped 9.5 per cent, forcing the stock exchange to trigger yet another 20 minute trading halt.
On Friday, SK Hynix raised $26.5bn (£19.7bn) via a secondary listing on its Nasdaq debut, marking the largest US listing by a foreign company.
The slide also dragged down shares of US rivals. Micron Technology fell 6.4 per cent, SanDisk 8.4 per cent and Western Digital 6.8 per cent. The broader Philadelphia SE Semiconductor index lost 3.6 per cent.
SK Hynix takes Wall Street
SK Hynix’s American depositary shares were priced at $149 each in its initial public offering last week, a slight premium to the chipmaker’s closing share price in Seoul on Thursday.
“It was always going to be a volatile ride after the company’s American depositary receipts began trading at such a heady valuation… US retail investors fearful of missing out on buying into the stars of the AI show,” Susannah Streeter, chief market strategist at Wealth Club, said.
“While companies right now can’t get enough of SK Hynix’s products, there are concerns that a lot of this demand has been front-loaded and will ultimately prove cyclical.”
Investors are increasingly opting to take profit and reduce their exposure to AI in order to prevent being caught up in wider volatility and potential further sell-offs, analysts said.
Neil Wilson, investor strategist at Saxo, said: “Stocks are finding it hard to sustain such lofty valuations because the adoption of AI and return on investment is arguably looking slower than expectations driving stock prices indicated.
“You have seen it go up so much so quick that it’s mainly about managing risk, trimming exposure and taking profits, but it underscores the risks to the trade and the likelihood that semis and associated AI bets will struggle to lead the market.”